Definition for : Tracking stock

Performance of a tracking Stock is indexed to the financial results of a Subsidiary or division. Technically a Share of the Parent company, a tracking Stock confers no voting right on the decisions of the Subsidiary that it represents. If the business is sold, however, the holder of the tracking Stock has the right to receive a portion of the capital gain. Tracking Stocks enable a company to retain full control of a Subsidiary while allowing the Market to establish a Value for it and providing a ready currency for Acquisitions.

(See Chapter 25 Selling securities of the Vernimmen)

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